Fellow home improvement competitor turns up the heat.
British retailer Kingfisher, owner of market leader B&Q and trade chain, Screwfix, has outlined its plans to boost sales and earnings by unifying its product range and investing cost savings into lower prices.
One week after Wesfarmers confirmed that Bunnings would pay $704 million for Homebase, Kingfisher unveiled a five-year turnaround plan aimed at boosting annual profit by £500 million ($1.03 billion) a year. The company plans to cut the number of suppliers and simplify its product range, reducing SKU’s by 76% across the group and by 7% at B&Q.
Kingfisher chief executive, Veronique Laury is aiming to leverage the chain’s scale by creating a single unified company, “where customer needs always come first.”
The retailer plans to strengthen its private-label brands, which represent only 20% of sales, and improve its digital capabilities to boost online sales and gain a bigger share of customer spending on DIY projects and renovations.
Analysts say Bunnings’ strategy to stock more hardware products and fewer home furnishings will mean it competes more directly with B&Q.
“B&Q is likely to react aggressively and it could be difficult to achieve the value leadership which has underpinned Wesfarmers’ retail success,” Deutsche Bank analyst Michael Simotas said.
However, most analysts believe Wesfarmers will achieve satisfactory returns from Britain over time with shares rising 7% since the deal was confirmed.
This story first appeared in Appliance Retailer.